Australian residential rental market

The Australian residential property market is the section of the Australian property market that provides rental properties by landlords to tenants. In Australia 31% of households rent their residences.[1] The vast majority rent from private landlords, and a small minority rent from public housing authorities. Over the last three decades the proportion of Australians in public housing has halved, whilst the amount renting privately has grown.[1][2] The average weekly price for a rental in Australia is $570 AUD per week.[3] Sydney has the most expensive capital city rents.[4] Rental rates have increased faster than inflation in recent years.[3][5]

In recent years, the cost of Australian rentals has become a prominent political issue; dubbed the 'rental crisis'. Demand remains high while supply is low.[4] Some have advocated supply-side reforms to address the crisis, such as reforms to construction approvals,[6] others for price controls,[7] and others for demand-side reforms like immigration restrictions. The actions of Australia's major parties on the issue have been widely criticised as inadequate,[8] though praised by some.[9]

Renting

Around one third of Australia's 9.8 million households pay rent for their residences. The other two thirds are owner-occupiers, half of whom have a mortgage.[1][2][Note 1] Of the households that rent, ~83% rent from private landlords, while less than 10% rent from public housing authorities.[2][Note 2] The proportion of households from a public housing authority has approximately halved since 1995, while the proportion renting from a private landlord has increased by over ~40%.[2]

Immigrants overwhelmingly settle in Sydney and Melbourne, exacerbating the shortage of supply in those cities.[10]

Rental prices

The average weekly price for a rental in Australia is $570 per week. Units are typically cheaper, at a national median of $540 vis-a-vis houses at $582.[3] Rental prices grew nationally by 10.1% between 2022 and 2023; substantially higher than the annualised CPI rate of 7% for the period.[3][5] Vacancy rates are historically quite low, at around 1%; a rate some argue is indicative of upward price pressure.[11]

Median rents across Australian cities as of Q1 2023 is as follows:[3]

Region Median Rent (per week) Gross yields[Note 3] Vacancy rates[Note 4]
Sydney $699 3.22% 1.2%
Melbourne $526 3.4% 0.7%
Brisbane $599 4.34% 1.1%
Adelaide $531 4.09% 0.3%
Perth $572 4.85% 0.6%
Hobart $563 4.39% 1.7%
Darwin $588 6.39% 1.8%
Canberra $674 4.19% 2.0%
National $570 3.9% 1.2%

Australian rental crisis

Rental availability and affordability has become a prominent issue in Australian Politics recently, with the topic being the subject of substantial media coverage and political debate.[12][13][14][15][16][17][18][19][20][21][22] Media reports have included coverage of low income households being unable to find suitable accommodation and forced into homelessness.[23][24] Some suburbs in Australia saw rent increase between 30-40% from 2020 to 2022;[24] with Bellingen on the NSW coast experiencing an annual rent increase of 48%.[25]

Reasons provided for the crisis vary, with some blaming failures in residential construction processes at the council level,[26] a lack of public housing construction,[27] vacant residences,[28] increases in short-stay accommodation[29] or demand factors like immigration.[12] Reductions in average household size during the Covid-19 pandemic have also been pointed for driving a demand squeeze. The pandemic has prompted a desire for more space and to live with fewer people.[30]

Solutions proposed to address Australia's rental crisis also vary. Some economists have proposed reforms to residential construction approval process,[6] while others (most notably the Australian Greens) have proposed an introduction of rent controls.[7] Major parties proposals at a national level to address the issue have included a scheme proposed by the ALP called the 'social housing fund',[31] whilst The Coalition has promoted assistance schemes to increase rates of home-ownership. The responses of Australia's major parties have been criticised as inadequate.[32][8][33]

See also

Notes
  1. The most recent housing statistics available are from the 2021 ABS census, a survey conducted every five years.
  2. The remainder rent from landlords that are neither private landlords, nor state or territory housing authorities; such as Commonwealth housing authorities like Defence housing
  3. Gross yields are calculated by dividing the annual weekly rent of a property by its purchase price. (i.e. [annual rent] / [property price] = [gross yield]). Net yields, which take into account aggregate financing, maintenance, tax, or other costs, are usually much lower
  4. Vacancy rates are calculated by dividing the number of properties vacant for any reason by the total number of properties. Reasons for vacancy may include: disrepair, vacancy prior to sale or construction, renovations, etcetera

References
  1. "Housing Occupancy and Costs". Australian Bureau of Statistics. 25 May 2022. Retrieved 19 September 2022.
  2. "Home ownership and housing tenure". Australian Institute of Health and Welfare. 5 April 2023. Retrieved 2023-05-08.
  3. Corelogic Quarterly Rental Review (Australia) (Report). 1 April 2023. Archived from the original on 8 May 2023. Retrieved 8 May 2023.
  4. Ainsworth, Kate; Pupazzoni, Rachel (6 July 2023). "National rental prices rise by 2.5 per cent as market battles high migration-led demand and housing supply shortages". ABC News. Australian Broadcasting Corporation. Retrieved 6 July 2023.
  5. "Consumer Price Index, Australia, March Quarter 2023 | Australian Bureau of Statistics". www.abs.gov.au. 2023-04-26. Retrieved 2023-05-08.
  6. "Sydney's rich are locking out the rest of us". Australian Financial Review. 2023-03-09. Retrieved 2023-05-08.
  7. Rose, Tamsin (2023-02-06). "Greens vow action as huge rent hikes see adults forced to move back in with parents". The Guardian. ISSN 0261-3077. Retrieved 2023-05-08.
  8. "With high prices and soaring rents, what are political parties promising to do about housing?". ABC News. 2022-05-08. Retrieved 2023-05-08.
  9. Quiggin, John (11 January 2022). "Labor's proposed $10 billion social housing fund isn't big as it seems, but it could work". The Conversation. Retrieved 2023-05-08.
  10. Sakzewski, Emily (19 January 2023). "Australia's rental market will only get tighter in 2023. Could more property investors be the answer?". ABC News. Australian Broadcasting Corporation. Retrieved 17 May 2023.
  11. Taylor, Josh (14 July 2022). "'A landlord's market': rents hit record highs across Australia's capital cities". The Guardian. Retrieved 22 September 2022.
  12. "Record immigration, nowhere to live. Welcome to Australia's rent crisis". Australian Financial Review. 2023-04-05. Retrieved 2023-05-08.
  13. "Australia's rental crisis hits women particularly hard". 9now.nine.com.au. Retrieved 2023-05-08.
  14. "Here's who is being hit hardest by Australia's rental crisis". SBS News. Retrieved 2023-05-08.
  15. Kohler, Alan (2023-04-12). "Answer to rental crisis is not easy, but necessary". The New Daily. Retrieved 2023-05-08.
  16. "These just might be the worst rentals in Sydney". www.9news.com.au. 6 April 2023. Retrieved 2023-05-08.
  17. Heagney-Bayliss, Tawar Razaghi, Melissa (2023-04-05). "'Whiplash': Rental crisis deepens as Sydney unit rents jump $120 a week in a year". The Sydney Morning Herald. Retrieved 2023-05-08.{{cite web}}: CS1 maint: multiple names: authors list (link)
  18. "Rental crisis: Why tenants are treated like second-class citizens". Yahoo Finance. 20 April 2023. Retrieved 2023-05-08.
  19. "'100 per cent we've got a rental crisis', as recent price hikes produce record rents across the nation". ABC News. 2023-04-05. Retrieved 2023-05-08.
  20. Onselen, Leith van (2023-04-19). "Labor lies its way out of rental crisis". MacroBusiness. Retrieved 2023-05-08.
  21. "Expert says there's no end in sight for Australia's rental crisis". 7NEWS. Retrieved 2023-05-08.
  22. "Australia's Rental Crisis Has Entered The Dark Ages". Junkee. 2023-04-18. Retrieved 2023-05-08.
  23. "What's causing the national rental crisis?". National Seniors Australia. 12 May 2022. Retrieved 22 September 2022.
  24. "Australia's runaway rents". ABC News. Australian Broadcasting Corporation. 21 September 2022. Retrieved 22 September 2022.
  25. Four Corners (3 October 2022). "Kaila was forced to live in a motel with her two kids. The rental crisis made her homeless". Australian Broadcastng Corporation. Retrieved 4 October 2022.
  26. Wright, Shane (2022-07-22). "Give councils cash to help bring down housing prices: think tank". The Sydney Morning Herald. Retrieved 2023-05-08.
  27. Rolfe, Brooke (8 August 2022). "Real cause of Australia's dire rental crisis revealed". news.com.au. Retrieved 22 September 2022.
  28. "Do 1,043,776 empty houses hold the answer to the rental crisis?". ABC News. 2022-09-01. Retrieved 2023-05-08.
  29. Nallay, Alicia (24 June 2022). "How Australia is dealing with Airbnb, Stayz in a housing crisis". ABC News. Australian Broadcasting Corporation. Retrieved 22 September 2022.
  30. Hanmer, Fred; Marquardt, Michelle (24 April 2023). "New insights into the rental market". Australian Bureau of Statistics. Retrieved 17 May 2023.
  31. Quiggin, John (11 January 2022). "Labor's proposed $10 billion social housing fund isn't big as it seems, but it could work". The Conversation. Retrieved 2023-05-08.
  32. "Are we on the cusp of another property boom as NSW heads to the polls?". ABC News. 2023-03-24. Retrieved 2023-05-08.
  33. Martin, Sarah (2022-05-03). "What are the differences between the major parties' homebuying policies this election?". The Guardian. ISSN 0261-3077. Retrieved 2023-05-08.
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